Volatile Return of Risk Aversion
CURRENCY TRADING SUMMARY – 27th May (00:30GMT)
U.S. Dollar Trading (USD) tested both sides of the market with early strength reversing sharply in the US. Better than expected May CB Consumer Confidence at 54.9 vs. 42 forecast was the main catalyst for the reversal. Concerns over demand for US bonds were lessened overnight as a large Treasury Auction was well received. The improvement in consumer confidence led to large gains in stocks and risk appetite improved. Crude Oil finished up $1.20 to finish the day at $61.20 a barrel. In US share markets, the Nasdaq was up 58 points or 3.45% and the Dow Jones was up 196 points or 2.37%. Looking ahead, Existing Home Sales are forecast at 4.66M vs. 4.57M previously.
The Euro (EUR) fell as stocks and sentiment soured in Asia on the back of saber rattling from North Korea which launched missile tests to back up the nuclear test on Monday. The fall from 1.4000 tested support under 1.3900 before rebounding with US stocks. March Industrial Orders fell -0.8% vs. 0.8% forecast. Overall the EUR/USD traded with a low of 1.3858 and a high of 1.4024 before closing at 1.3980.
The Japanese Yen (JPY) kept to a very tight range as the USD strengthened and weakened broadly together. Most of the crosses finished higher rallying on the back of the US stocks. Overall the USDJPY traded with a low of 94.49 and a high of 95.17 before closing the day around 94.95 in the New York session. Looking ahead, April Trade Balance is forecast at -57.5bn vs. 11bn previously.
The Sterling (GBP) rallied sharply off European lows although settled comfortably below the key 1.60 level. The banking sector rebound is helping the Pound to recover faster than other currencies with London a major financial centre. Overall the GBP/USD traded with a low of 1.5776 and a high of 1.5971 before closing the day at 1.5930 in the New York session.
The Australian Dollar (AUD) was pushed lower on a North Korean backed rise in risk aversion. The change in direction in the US session saw heavy AUD/JPY buying propel the Aussie to fresh year highs above 0.7880. The key 0.8000 level beckons above and is a natural target for AUD bulls. Overall the AUD/USD traded with a low of 0.7701 and a high of 0.7886 before closing the US session at 0.7870.
Gold (XAU) reacted to USD strength falling below $950 in Europe before recovering later in the day. Overall trading with a low of USD$939 and high of USD$958 before ending the New York session at USD$952 an ounce.
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.3531 |
1.3728 |
1.3980 |
1.4058 |
1.4148 |
|
USD/JPY |
92.52 |
93.54 |
95.00 |
95.26 |
96.70 |
|
GBP/USD |
1.5450 |
1.5576 |
1.5920 |
1.6054 |
1.6198 |
|
AUD/USD |
0.7451 |
0.7630 |
0.7860 |
0.7929 |
0.8097 |
|
XAU/USD |
925.00 |
936.00 |
952.00 |
967.00 |
978.00 |
Euro – 1.3980
Initial support at 1.3728 (May 21 low) followed by 1.3728 (May 21 low). Initial resistance is now located at 1.4058 (Jan 2 high) followed by 1.4148 (Dec 31 high)
Yen – 95.00
Initial support is located at 93.54 (Mar 19 low) followed by 92.52 (Mar 19 low). Initial resistance is now at 95.26 (May 21 high) followed by 96.70 (May 19 high).
Pound – 1.5920
Initial support at 1.5576 (23.6% retrace 1.4398 to 1.5944) followed by 1.5450 (May 21 low). Initial resistance is now at 1.6054 (61.8% retrace 1.3503-1.7631) followed by 1.6198 (Nov 5 high).
Australian Dollar – 0.7860
Initial support at 0.7630 (May 19 low) followed by the 0.7451 (May 18 low). Initial resistance is now at 0.7929 (50% retracement of 0.9847-0.6012 decline) followed by 0.8097 (Sep 30 high).
Gold – 952
Initial support at 936 (May 21 low) followed by 925 (May 20 low). Initial resistance is now at 967 (Mar 20 high) followed by 978 (Feb 25 high).
